Chapter 45

How to Use Product Bundling to Increase Average Order Value

The average order value allows you to see an average of what people spend when they shop on your store. You can increase this by cross-selling, upselling, product bundling, having a free shipping threshold and other marketing tactics. In Q1, the average order value for online retailers was approximately $82.5(USD). While your average order value varies based on the average price point of your products, you should actively be trying to increase it. By increasing your average order value, you could increase your profit. If a customer already has their credit card out, it’s easier to upsell them at that moment than it is to try to get them to shop with your brand a second time around.

Example:Sephora grows the customer’s average order value in two key ways. First, they require that customers make a minimum purchase to get free shipping. If a customer is only a couple dollars away from free shipping, she may buy a low cost product to get free shipping. The second tactic they use is for their loyalty program. Customers can reach a higher rank in the loyalty program if they spend a certain amount of money. Repeat customers are informed of how much money they need to spend in order to reach the next level. Each level has its own set of perks which may entice a repeat shopper into placing a larger order to gain access to those perks.

Product Bundling Tips:

Greats offers discounts for bundle purchases. Customers who purchase two pairs of shoes at the same time get a 10% discount. If they purchase three pairs of shoes, they receive a 12% discount. The discount offered is low but is a nice perk for those who can’t decide between two products. It encourages them to purchase more with a financial reward. It also helps the store owner make a higher profit off the customer.

Suit Supply requires a minimum spend of $500 to offer customers free shipping. This is notably much higher than the average retailer. The main reason for doing this is to encourage customers to buy their higher end products and suits. However, they also have suits under $500. The pricing of the products is interesting as well. The suits under $500 tend to cost $429 and their ties cost $75 which would bring you to just over $500. They planned this intentionally to sell more ties.

Tattly automatically boosts their average order value by giving customers a set of 2 tattoo instead of just one. While a customer likely appreciates the bonus tattoo with their purchase, it helps the retailer make more money. The average tattoo on their website costs around $5-$6 retail. If they sold the tattoos individually that same price tag would likely be too high. However, if the cost was sold at $2.50-$3 for the one, the profit margins would be too low for the business. By product bundling every tattoo, they make more per customer. Notably, customers need to spend $50 to receive free shipping. Having a conditional threshold is another way Tattly helps increase their average order value. When customers see the cost remaining that they need to spend to receive free shipping, they may go back to buy more tattoos.

Death Wish Coffee created a Bundles page to boost average order value. They created a bundle of 20 single serve coffee cups, a gift set, and a chemex with coffee set. By bundling these items, they help boost their sales. However, the fact that they created a page with bundled deals adds emphasis to these products which are also listed on the coffee product listings. Creating a page of bundled deals can help customers who are looking for a better deal for more products. My only recommendation for Death Wish Coffee would be to create bundled deals with the same product. If a customer prefers the ‘strongest coffee’ product, they’d likely want to buy more of it. By bundling 2 or 3 bags together, they can increase their average order value. Product Bundling works well for products if its the same product for items such as food, drink, beauty products and other perishable products.

Au Fit Fine Linens boosts their average order value with a Gift Registry. Their product collection ties in well with the wedding market. They promote their registry as a ‘Wedding and Gift Registry’ to tap into that market. They even have a Newlywed Starter Kit which includes a list of the type of products they can add to their gift registry. You can see the gift registry apps available on Shopify in the tools section below.

NSFW (sex toys store): Ann Summers includes an offers page on their website with their latest deals. Typically, their offers are focused on boosting average order value. For example, they’ll have a Buy One Get One Half Off deal on lingerie. Customers will also find the brand’s Clearance section on this page. You can also recommend clearance products as an upsell when customers make a purchase on your store. The product costs are typically lower making it an affordable buy for your customer. If you carry inventory, it’ll help clear out old inventory so you can make room for newer inventory.

John Lewis has one of the most elaborate Gifts sections in ecommerce. While gift guides aren’t directly tied in with increasing average order value, they can be. John Lewis has gift guides for him, her, and important people in your life such as parents, grandparents, children and more. Say you’re buying your presents online for Christmas. It’s much easier to browse the John Lewis website for all the members of your family. Since the gifts section is so elaborate, customers can easily buy gifts for all their loved ones in one place. Thus, making it a one stop shop. If the customer does browse several gift guides, they may be likely to buy gifts for their entire family on one website rather than searching around on multiple sites. Thus, the average order value is raised per customer.

ColourPop encourages customers to buy more in a unique but effective way. On their store, they include a section with different looks. There’s a video tutorial on how to achieve the look. However, below that it includes every product needed to complete the look. No pop-ups appear when a customer adds an item to their cart. This is great because it allows customers to add several items to their cart quickly. This can help boost average order value as customers wanting to complete the exact look can buy all the products for it with ease.

Barnes & Noble offers discounts for bulk orders. Discounts are available if customers order 50 or more copies of the same book. Online retailers can offer similar discounts to boost average order value on various products. You’ll need to find the right number that works well for your store. Typically 3-4 works well for bulk purchases for the average consumer. However, if you wholesale your products to another business you might offer discounts for 50 or more of the same product.

Creating a loyalty program can help improve average order value. You can gamify the experience to keep customers hooked on shopping at your store. For example, like McDonald’s does with their Monopoly game each year. Every time a customer purchases from your store, you can award them points. The more points they earn, the better the perks they receive. If a customer knows they only need a few more points to reach the next perk, they’ll be more likely to buy more from your store provided that the perk is worthwhile.

Upselling products at checkout can also help improve average order value. For example, on our store, we offer a free product if customers order 3 or more from a product category. If customers have already bought two items, they may be compelled to buy a third to get a free product. We usually get a few of these upsells each day so they have been quite effective on our store.

You can also show customers cross-sell items on the product page. These are items that the customer may be interested in if they purchase a specific product. For example, if they buy something battery operated, you might cross sell batteries with it.

Product Bundling Tools:

Free Gifts by Secomapp is average order value app that can boost sales by offering your customers gifts on certain products or gifts on cart. If you’re looking to offer BOGO deals, or giving a free gift with a minimum purchase, this app is worth checking out. You can choose from a wide range of promotion deals that you can share with your customers. For example, ‘Buy X, Get 30% off Y,’ ‘Spend between $100-$300 – Get a free gift’ and more.

Gift Reggie is a gift registry app. Customers can add products to their gift registry with ease using Gift Reggie. Gift registry apps work best for general stores or stores within a niche like home and kitchen with an extensive selection of products. Pricing starts at $5 and this app has a 30 day free trial.

Spin-a-Sale is a gamified discount app. While it’s main objective is to help reduce abandoned carts, it can help increase average order value. If a customer added several items in their cart and abandoned because of a high price, the app acts like a discounter on those purchases. And even if it’s only one product, it still beats 0. It starts at $4.99/month.

Free Shipping Bar educates your customers on your shipping rates. If your goal is to increase average order value you likely need to set a free shipping threshold. On average, you want the threshold to be 2-3x the price of the average product. For example, if your average product is $50 you’ll want it to be $100. If you’re average product is $25, you should set it at $75. You’ll need to set up your shipping rates in Shopify and use this app to easily tell customers what your shipping rate is.

Cross Sell is an app that adds a ‘You may also like…’ section to your website. This will show your customers other recommended products on your product page. You can customize the app to match your theme. And it starts at $9.99 a month.

Product Upsell is an app that upsells your customers at checkout. It’s much easier to convince a customer to buy more at checkout than it is to convince a new customer to buy. By upselling your customers you can increase your average order value with little work. This average order value app starts at $9.99.

Product Bundling Resources:

10 Ways to Increase Average Order Value covers ten ways you can improve your store’s average order value. You’ll learn how to get a higher volume of sales by giving customers gift cards, maximizing limited time deals and promoting savings with bulk orders.

Product Bundling Expert:

Steve Jones, founder of Cross Sell, says “Unless you’re building an outfit or accessorizing a larger item with compatible must haves, it can be difficult to develop a cross-selling strategy. We always suggest that Merchants should work on their most popular products first and curate the associated cross-sells rather than leaving it to an algorithm. Whilst most of us don’t have the budget for a professional photoshoot, we do have the ability to curate a showcase of products as cross-sells on the product page. Don’t worry if some of the cross-sells you select are more expensive than the product being viewed, just curate a desirable showcase as if you’re putting together a photoshoot. Your customers will hopefully buy in to your vision and you’ll start to see some of your curations turn up in customer orders.”